Top Trade Ideas for the Week August 22, 2016: Bonus Idea

• Posted by Greg Harmon
• on August 22nd, 2016

Here is your Bonus Idea with links to the full Top Ten:

Intel, $INTC, was a market leader during the dotcom collapse in 2000. It had a price of over $75 in July 2000 before losing over 80% of its value over the next 28 months. Since that time it has retraced 38.2% of the move down and stalled. The chart below shows that one jump to the 38.2% level but also that the 35.25 price level has been a big road block for 2 years.

The last year of that price action has shown consolidation against 35.25 and tightening support, rising in an ascending wedge. A break of the wedge pattern gives a price target to 45.25. The move higher since the end of June establishes a secondary target on a Measured Move to 38.50 along the way. Momentum indicators support more upward price action. The RSI is bullish and rising and the MACD is rising too. And the Bollinger Bands® are open to the upside for a move.

Above resistance at 35.25 there is some at 37.90 and then you have to go back to November 1999 to find it at 39.50 and 42. There is very little price history above that but some resistance possible at 45.30 and 61.50. This stock is about to get out of a big log jam. Support lower comes at 34.40 and 33.75 before 32.70. Short interest is low at 1.4% and the company is expected to report earnings next October 18th.

Options chains show large open interest this week at the 35 and 35.50 strikes on the call side and at the 34.5 strike on the put side. At September Expiry the 35 call strike has far and away more open interest than any other strike on both sides, with the 35 put strike next. That might hold it in this range for another month or draw it back if it moves in the short run. The October expiry, the first after the next earnings report, shows the biggest open interest at the 35 call strike as well. But there is very large open interest at the 36 and 37 call strikes too. Looking to January 2017 sees the 35 strike largest too but also volume at the 37 and 40 strikes.

Intel, Ticker: $INTC

Trade Idea 1: Buy the stock on a move over 35.25 with a stop at 33.

Trade Idea 2: Buy the stock on a move over 35.25 and add an October 35/32 Put Spread while selling a January 2017 38 Call, 12 cents for the collar.

Trade Idea 3: Buy the January 35 Call ($1.97).

Trade Idea 4: Buy the January 35/October 37 Call Diagonal ($1.50).

Trade Idea 5: Buy the January 35/October 37 Call Diagonal and sell the October 33 Put ($1.05).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which with August Options Expiration in the rear view mirror, sees the equity markets are looking settled and stable, digesting their moves higher.

Elsewhere look for Gold to consolidate with an upward bias in its uptrend while Crude Oil continues to pump higher. The US Dollar Index looks to continue lower in its broad consolidation while US Treasuries are biased lower in their short term consolidation. The Shanghai Composite looks to continue higher but Emerging Markets look ready to consolidate or pullback short term in their uptrend.

Volatility looks to remain at abnormally low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts suggest more sideways motion in the short term with the possible exception of the IWM which is drifting higher. Longer term, the topping candles suggest a pause or pullback may be in order soon. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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